Markets this week: BHEL, TCS top Sensex losers
By Sankalp Phartiyal and Ankush Arora
The BSE Sensex ended down 0.7 percent in what was a slow week for Indian shares. The week began with the benchmark index sliding 1.5 percent on Monday as foreign institutional investors (FIIs) continued to sell as part of a slump in emerging markets.
Investor sentiment remained subdued despite a survey on Monday showing that Indian factories started 2014 on a high note, with manufacturing activity growing at its fastest pace in nearly a year as domestic and overseas orders increased.
The remaining four sessions saw the Sensex ending marginally in the green. The benchmark is, however, down 3.7 percent so far this year.
Analysts say FIIs will be cautious while buying Indian shares in the coming weeks, as a general election is due by May.
Consumer inflation data for January due on Wednesday and wholesale inflation data on Friday will be the next key domestic triggers.
Here are the top five Sensex gainers and losers of this week:
BHEL: Shares of the power equipment maker closed 10 percent lower this week, a day after it reported a 41.2 percent drop in December-quarter profit.
“Given the strong competition (domestic as well as international), declining order book, and a weak capex cycle, we expect BHEL’s margin and ROE (return on equity) to decline from the current levels,” Angel Broking said in a research report on Feb. 6, maintaining a neutral stance on the stock.
In 2013, the stock fell more than 20 percent.
Of the 48 analysts covering the stock, 33 recommend a ‘sell’ or equivalent rating, according to Thomson Reuters data.
TCS: Shares in India’s leading IT services provider were down around 4 percent this week. In 2014, the stock has lost 1.3 percent as compared to a 72 percent rise last year.
On Thursday, shares of Indian IT companies were under pressure after Cognizant Technology Solutions forecast 2014 revenue below analysts’ expectations, raising concerns about the sector’s growth prospects.
Cognizant has most of its employees in India.
Last month, TCS said it expected sales growth to accelerate in the financial year ending March 2015. Rival Infosys also raised its sales growth outlook for this fiscal year on signs of an economic revival in the United States and Europe.
“With strong positioning in its ‘bread and butter’ services and key verticals and its balanced geographical presence, TCS is well positioned to gain from the recovering demand environment,” Ambit Capital said in a research report on Feb. 3.
INFOSYS: Among the worst Sensex performers this week, the Bangalore-headquartered company’s stock was at the no. 3 position, closing 3.6 percent lower.
In 2013, the stock surged 50.3 percent, as compared to gains of 2.3 percent this year.
Of the 54 analysts covering the stock, 39 have a buy or equivalent rating, according to Thomson Reuters data.
HDFC: The mortgage lender fell 3 percent this week, making it to our list of top five Sensex losers.
Aided by higher loan growth, HDFC last month reported a 12 percent gain in December quarterly profit, meeting forecasts. The company, however, faces an intensifying battle from banks that are aggressively pushing into HDFC’s home loan turf.
“HDFC has maintained its leadership position in the individual loan segment. Furthermore, HDFC seems to be taking the right approach in the corporate segment by slowing down growth. Hence, we retain our OW (overweight) rating,” Barclays said in a research note dated Jan. 22. The brokerage also revised its 12-month price target to 917 rupees from 876 rupees.
HINDALCO: The company’s stock ended down nearly 3 percent this week, taking its losses for the year to 13.2 percent.
“Uncertainty around availability of the captive coal blocks for Hindalco’s new projects makes us believe that FY14-15 would be a painful period,” Ambit Capital said in a research note dated Jan. 17.
Of the 38 analysts covering the stock, 15 have a ‘buy’ or equivalent rating, while 17 recommend a ‘sell’ or equivalent rating, according to Thomson Reuters data.
(Editing by Tony Tharakan; Follow Tony on Twitter @TonyTharakan, Sankalp @sankalp_sp and Ankush @Ankush_patrakar | Disclaimer: This article is website-exclusive and cannot be reproduced in any form without permission)